TiVo - leaderboard - 9-16-19
  • Report: Apple Has Committed $6 Billion to Originals

    The Financial Times reported that Apple has committed to spend $6 billion on original TV shows and movies for its upcoming Apple TV+ service, which will launch in November. That’s up from the $1 billion it was reportedly budgeting just 2 years ago. The increase no doubt reflects the hard reality that has set in at Apple about what it’s going to cost to compete, rather than just dip its toe in the SVOD water.

    Included in the budget is a $300 million commitment for 20 episodes of “The Morning Show” with Jennifer Aniston, Reese Witherspoon and Steve Carrell (working out to $15 million per episode). Bloomberg separately reported the monthly price will be $9.99, above the introductory $6.99 per month Disney+ price but below Netflix’s $12.99 per month price. Though Apple teased a number of its upcoming shows at its big March media event, it didn’t reveal anything on pricing.

    Since then Disney unveiled Disney+’s ultra-low price, which will reset consumers’ expectations about what an SVOD service’s value proposition should be (the Disney+, ESPN+ and Hulu bundle for just $12.99 per month will also be a big influence on the market). And WarnerMedia announced HBO Max, though its pricing in the $17-18 per month range will also have a difficult time fitting into the new SVOD value paradigm.

    There is no question Apple has vast marketing resources and a ubiquitous installed base of users. The company has also been making a big push into services, which is beginning to pay off. So Apple TV+ will launch with significant advantages.

    But, as I’ve written before, Apple is coming very late to the video party. And without a deep library of content that Disney or WarnerMedia has, it will be an uphill climb to spend on content they’re unfamiliar with. Remember, even Netflix and HBO started with others’ content before creating and promoting their own. And there’s plenty of concern that Netflix losing “The Office” and “Friends” will cause significant audience erosion, even with 150 million plus existing subscribers.

    Unfortunately for Apple, other than outright acquiring a studio or another entity with a back catalog, there’s little choice but to spend big on originals and then hope the shows resonate. If they don’t then there will be a mountain of losses with little benefit. But if the shows do resonate and Apple builds a subscriber base, then incumbents like Netflix, Hulu and Amazon will have a major new competitor that will further drive up the cost of A-list talent and pressure their market share.

     
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